Tag: new jersey unions

Court: New Jersey Must Make Full Contribution to Pension System

gavel

A New Jersey Superior Court judge on Monday ruled that Gov. Chris Christie acted outside the law when he cut state pension contributions by more than $2 billion through fiscal year 2015.

Through FY 2015, the state’s scheduled pension contribution was $3.85 billion; but in an effort to divert funds to the general budget, Christie cut the pension payment down to $1.38 billion.

Unions sued him shortly after, alleging a breach of contract.

A judge now says Christie must make the full payments.

The full payments, however, are not included in Christie’s budget proposal. That’s because the state is appealing the ruling.

More from Reuters:

Superior Court Judge Mary Jacobson said New Jersey could not renege on its obligations to teachers, firefighters and police who sued the governor and state legislature, which is controlled by Democrats.

“The court cannot allow the State to ‘simply walk away from its financial obligations,’ especially when those obligations were the State’s own creation,” Jacobson wrote.

While New Jersey’s projected budget shortfall was “staggering,” the statute failed to adequately explain why the cuts were reasonable, the court said.

Christie spokesman Michael Drewniak said the governor would appeal.

“The Governor will continue to work on a practical solution to New Jersey’s pension and health benefits problems while he appeals this decision to a higher court where we are confident the judgment of New Jersey’s elected officials will be vindicated,” Drewniak said in a statement.

Damon Silvers, director of policy and special counsel for the AFL-CIO union, which was one of the plaintiffs, said the decision “reinforces what should be black letter law, pension promises by government to the people who work for government are real contractual obligations that must be honored and must be funded.”

Under new GASB accounting rules, New Jersey’s pension system is 44 percent funded.

 

Photo by Joe Gratz via Flickr CC License

New Jersey Lawyers: 2011 Pension Reforms Invalid, State Doesn’t Have to Contribute to Pension System

New Jersey

New Jersey’s lawyers argued in court yesterday that Chris Christie was acting legally when he cut the state’s pension contribution last year by over $1 billion.

They argued that it didn’t matter that the state’s 2011 pension law – signed by Christie – mandated full pension payments from the state, because that law is unconstitutional.

More on the arguments from NJ.com:

A lawyer for the state argued today that Gov. Chris Christie cannot be forced to make full pension payments because the 2011 law committing him to fully fund the state system in exchange for union concessions was unconstitutional.

Interrupting the assistant attorney general, Superior Court Judge Mary Jacobson said the state’s case suggest that 2011 promise was “a hollow commitment.”

“You’re saying it should have been known at the time that it was a false promise,” Jacobson asked. “You’re saying that from the get-go, this statute, the requirement to make these contributions was void.”

[…]

Attorneys for the state said that the contract was unlawful from the start because the state cannot be obligated to any spending unless it’s approved by the voters — barriers imposed through the debt limitation clause and appropriations act.

Much of today’s arguments centered on whether the 2011 law conflicts with those restrictions.

The contract would interfere with the Legislature’s discretion over how the state spends its money, lawyers for the state said, and the state can’t be obligated to debt unless it’s approved by the voters.

Jacobson was skeptical of the state’s arguments that the appropriations act and debt limitations clause would trump the contracts clause, which appears in both the state and federal constitutions.

But, the state countered, the appropriation and debt limitation measures apply to the formation of contracts, while the contract clause applies to the enforcement of contracts.

In 2014, Christie cut a total of $2.4 billion in state payments to the pension system and used the money to cover revenue shortfalls elsewhere in the budget.

 

“New Jersey State House” by Marion Touvel – http://en.wikipedia.org/wiki/Image:New_Jersey_State_House.jpg. Licensed under Public domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:New_Jersey_State_House.jpg#mediaviewer/File:New_Jersey_State_House.jpg

Top Police Union Official Says Christie Used “Bait and Switch” on Pensions

Chris Christie

The New Jersey Police Benevolent Association is one of the dozen unions that filed a lawsuit against the state when Chris Christie opted to cut the state’s pension contributions by over $2 billion in 2014 and 2015.

And while lawyers are arguing the case in the courtroom, NJPBA president Patrick Culligan made his case in a letter to members this week, where he accused Christie of using a “bait and switch” to feign pension reform.

From the letter:

We are expecting that the Governor will propose significant further pension and healthcare reductions. We believe that the formal report of the Governor’s Pension Commission will be released very soon to support the Governor’s expected message today.

[…]

In the 2012 State of the State, Governor Christie proudly proclaimed ‘we saved their pensions’. He added; ‘Our pension system, which was on a path to insolvency, is now on much more sound footing. With your help, we tackled the problem head on.’ It was a success he shouted on the national stage for years after. He has repeatedly called Chapter 78 his crowning bipartisan achievement.

But his reflections on Chapter 78 mask his own deliberate acts to destroy pensions as we know them. I would like to remind everybody that in 2014 the Governor declared parts of his reforms ‘illegal’ in the State’s own legal briefs responding to our pension lawsuit. The former Federal Prosecutor, the attorney, the Governor who signed that law declared his obligation to make a pension payment to be ‘illegal’ and unenforceable. He also vetoed bipartisan legislation that would have required our additional contributions required by Chapter 78 to actually go back into PFRS where they belong. He has proven time and time again that he wants our system to fail.

This unfortunately is the kind of bait and switch we have come to expect from Governor Christie’s ‘promises’.

Read the full letter here.

 

Photo By Walter Burns [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Judge Hears More Arguments Thursday In Fight Over New Jersey Pension Payment Cuts

New Jersey State House

A Superior Court judge on Thursday will hear the latest round of arguments in the battle between New Jersey and public-employee unions.

The unions are suing the state after Chris Christie cut the state’s pension contribution by nearly $1.5 billion and used the money to over shortfalls in the general budget.

From NorthJersey.com:

If Judge Mary Jacobson rules against the Christie administration and orders the larger payment to be made, it could force the governor and lawmakers to come up with more than $1.5 billion in revenue midway through the state fiscal year or make new cuts.

The pension system is worth $80 billion and covers roughly 770,000 current and retired employees. But for years, governors, including Christie, have skipped or made only partial contributions into the system, leaving it funded at only 33 percent.

Unions that represent teachers, firefighters, state police and other public employees are arguing that a state law signed by Christie in 2011, which overhauled the pension system, also included a contractual obligation that the larger payment would be made.

Hetty Rosenstein, state director of the Communications Workers of America, one of the unions in the lawsuit, said the language in the 2011 legislation was framed specifically in response to prior court rulings on the pension funding issue.

“I think we’ve made a compelling case,” she said.

Administration attorneys have countered that the governor is required by the state constitution to maintain a balanced budget, giving him the authority to effectively ignore the law that calls for the larger payments if he needs the money to fulfill his constitutional responsibilities.

The pension reform law signed in 2011 mandated that New Jersey contribute a certain amount of money to the pension system each year.

But when the state faced a revenue shortfall of $1 billion in 2014, Christie made the decision to cut the state’s pension payment and use the money to fill the budget shortfall.

 

Photo credit: “New Jersey State House” by Marion Touvel – http://en.wikipedia.org/wiki/Image:New_Jersey_State_House.jpg. Licensed under Public domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:New_Jersey_State_House.jpg#mediaviewer/File:New_Jersey_State_House.jpg

Christie’s 2017 Challengers Already Forming Pension Policies

Chris Christie

New Jersey’s next gubernatorial election is still three years away – but Christie’s potential Democratic challengers are already meeting with stakeholders and gearing up their pension policies.

Those potential challengers include Senate President Stephen Sweeney, Assemblyman John Wisniewski, former U.S. ambassador Philip Murphy and Jersey City Mayor Steve Fulop.

They all have one thing in common: they believe pensions will be a big issue in the 2017 election, and Christie will be on the wrong side of it.

From NorthJersey:

Although the contest is still three years away, several Democrats are already conducting a fierce, behind-the-scenes pre-primary.

And, for the time being, the best way of wooing unions representing police, firefighters and thousands of government workers appears to be to trumpet one of labor’s bottom-line demands: Unless Governor Christie reverses course and makes his promised payments to the pension system, any further discussion of more changes, including a call to scale back workers’ benefits, is dead in the water.

“The employees are paying their share, [Christie] should do the same,’’ said state Senate President Stephen Sweeney.

Christie’s reform push — a public tour over the summer and creation of the 10-member panel of experts who issued last month’s report — looks like it may run smack into the Democratic Party’s solidarity with public employee unions.

That unity will most likely be seen in the Senate, where Sweeney, a Gloucester County Democrat, has the power to derail Christie’s agenda when it suits him. Sweeney has cooperated with Christie on a whole range of deals — including the hotly contested 2011 reforms that forced public workers to pay more for pension and health care benefits, raised the retirement age and cut cost-of-living adjustments. Sweeney is not cooperating this time.

Other potential Democratic candidates in the 2017 race are also lining up behind the union position.

“We have no credibility as a government unless we stand up and meet our obligation to the pensioners,” said Philip Murphy, who served as a U.S. ambassador to Germany and led the Democratic National Committee’s fundraising from 2006 to 2009. “I think it’s very hard to go back to the well until the state can prove that it’s a reliable partner in this.”

Assemblyman John Wisniewski, D-Middlesex, who opposed the first round of benefit changes in 2011, also toed the union line. “Why would anybody believe assurances about any new set of promises about the pension fund when the promises that were made under heavy skepticism to begin with have not been lived up to?”

Unions were angry when Christie cut the state’s pension payments and used the money to plug budget shortfalls elsewhere. Union leaders said that workers were doing their part by contributing money, but the state was shirking its responsibility. From NorthJersey.com:

“We can’t take anyone seriously who talks about fixing the pension system without putting in additional resources,’’ said Ginger Gold Schnitzer, director of governmental relations for the New Jersey Education Association, the powerful teachers union. “It’s ridiculous to think a pension system can survive without regular [state] contributions. Our members have made those contributions.”

According to a recent report from the New Jersey Pension and Benefit Study Commission, the state if shouldering $37 billion of pension liabilities. That number has tripled since 2005.

New Jersey Lawmaker: Turn Pension Management Over To Unions

New Jersey State House

 

New Jersey Senate President Steve Sweeney (D-West Deptford) offered up a new idea for pension management during an interview on Monday: let unions manage their members’ pensions. The verbal proposal was short on details, but it would certainly be a dramatic change.

From NJ Biz:

“I think we need to turn the pensions over to the unions, where they’re responsible for managing it,” he said. “I think that they would be willing to do that if there was a funding source that made the payments.”

Sweeney said having the public worker unions manage their own pensions would put the unions in a position to succeed — or fail —on their own.

Sweeney says unions, not legislators, would have a better handle on how to manage their workers’ pensions and “should control the future of their retirement.”

“If they screw up the investments, they’re responsible,” he said. “Just because they would manage it, doesn’t mean they’d screw it up. In fact, they’d probably manage it better because there would be no politics in it, because it would be completely removed from politics.”

Sweeney, noting that it was the first time he had publicly voiced the idea, did not offer any additional insight on implementation strategy or plans to formalize the proposal.

Several union leaders, including the director of New Jersey’s largest public union, said the idea was interesting but hard to evaluate given the lack of details. From NJ Biz:

Hetty Rosenstein, state director for the Communications Workers of America, New Jersey’s largest public union, was intrigued by the idea, adding that she was in favor of more “genuine oversight” of pension management. But what that would actually look like under Sweeney’s proposal is yet to be seen, she said.

“Without more details, it’s difficult to respond,” Rosenstein said.

Steve Baker, associate director for public relations for the New Jersey Education Association, the state’s largest teachers union, declined to comment without first having more information.

Gov. Christie’s office hasn’t issued a statement or given a comment on the idea.

NJ Newspaper: We Don’t Trust Christie’s Pension Panel

Chris Christie

The Daily Record released a scathing editorial today denouncing the efficacy of New Jersey’s Pension and Benefit Study Commission and the motives behind its creation.

The editorial claims that Christie put the panel together to act as a political shield when he eventually cuts worker benefits – which Christie has said will be a major part of the reforms that will eventually be proposed.

From the editorial:

Union and Democratic leaders are already denouncing the commission’s report as a sham designed from the start to do little more than bolster Christie’s claims that benefit cuts are the only answer. We can’t blame them. Remember how eager Christie was to declare success when a reform agreement was reached in 2011? That supposedly set New Jersey’s pension system on the road to solvency.

But now we’re being told it’s not even close. What’s happened since then? New Jersey’s economy has continued to lag on Christie’s watch. The governor then reneged on one of the state’s pension payments into the system that was part of that original agreement. That only exacerbated the long-term financial burden and — not coincidentally — furthered Christie’s own argument that more benefit cuts are unavoidable.

This is yet another case of Christie putting his own presidential ambition over the interests of New Jerseyans as he bows to national conservatives. The right wing doesn’t like unions, and will applaud any effort by governors and other elected officials to gut union influence. Slashing and burning public-worker benefits is a means to that end, and Christie is carrying out that task with dedication.

[…]

…When the commission delivers its recommendations, expect Christie to repeatedly cite them as “bipartisan” evidence of his wisdom in support of whatever cutback plan he puts forth. Democrats will ridicule the entire process as merely serving Christie’s will. And we’ll be no closer to arriving at some important decisions, in large part because Christie isn’t much worried about what New Jerseyans think anymore. He’s got bigger plans.

Read the rest of the editorial here.

Unions Rev Up New Appeal In New Jersey Pension Case – Read the Full Complaint Here

640px-New_Jersey_State_House

Unions lost the first round in the pension case playing out in New Jersey, when a judge ruled last week that New Jersey was too cash-strapped to make its full contribution to the pension system. The state instead diverted that money, totaling over $800 million, towards balancing the state budget.

Unions were hoping, and still are, for a court ruling that would reverse state Gov. Chris Christie’s decision to divert that money.

To that end, attorneys for the labor groups amended their court filings on Wednesday to update their argument that Christie broke the law when he slashed the state’s pension contribution.

The contribution, unions argue, was legally required due to a law that Christie himself signed in 2011. From the Asbury Park Press:

The updated court filings are a step toward a new hearing, expected in August, and fuller vetting of the issue by Jacobson, who said claims about the 2015 budget and pension payments needed time to become “ripe.” Christie made changes in the new budget days after Jacobson’s prior ruling.

 
“The amended filings reflect the fact that the governor didn’t make the full 2014 payment and made his changes in the 2015 budget,” said NJEA spokesman Steve Baker. “Other than that, there’s no substantive difference in the arguments we’ve had all along.”

 
Christie spokesman Kevin Roberts pointed to the Republican governor’s past comments on the court case, when Christie called the spending cut “one of the hard choices the people of New Jersey expect me to make.”

 
“For our state’s families who are already overburdened by high taxes, raising taxes even further would not solve a problem created by decades of neglect and irresponsibility,” Christie also said.

 
The unions will have to make a stronger argument to Jacobson about Christie’s ability as governor to set fiscal priorities for such things as hospitals, nursing homes, tuition aid and other programs. In the June court hearing, the unions also failed to force Christie to turn $300 million from state surplus as a down payment on the shorted pensions. “The governor determined it would be extremely unwise to not maintain that amount,” Jacobson told the lawyers for the plaintiffs.

 

Read the full complaint here:

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Photo: “New Jersey State House” by Marion Touvel  Licensed under Public domain via Wikimedia Commons